Should You Start Your Real Estate Investing Career As a Bird Dog?

One of the most frequently asked questions that I get is, “How do I get started in real estate investing?” This confusion comes partly from so many options and courses offered to newbies. They range from wholesaling to buying commercial properties and everything in between. So where should a new investor start?

Newbies are sometimes recruited by seasoned investors to find properties for them. These seasoned pros advertise on roadside signs, in newspapers, and online. Their message is straight forward and something to the effect of how to earn $10,000 a month or more as an apprentice to a real estate investor. Often the types of apprenticeship and specific duties aren’t disclosed until the newbie looks closer into what the job offer is all about.

The name “bird dog” comes from the fact that trained dogs are used to point at various upland game birds, such as quail or pheasant in heavy brush before a hunter can see or hear them. These bird dogs stop when they smell or hear a bird and freeze in a stance so the hunter can move forward and flush the birds to get a shot. Bird dogs in real estate investing flush out perspective property sales based on a criterion given to them by their seasoned investor.

The advantages of being an investor bird dog are that you will learn a specific or a few specific prospecting techniques to find motivated sellers. These usually include the techniques that the investor doesn’t want to do himself because of the danger, inconvenience, or the boring repetitive nature of the prospecting. The most common examples are door knocking in neighborhoods that may be dangerous, hanging flyers on door knobs, pre-qualifying homeowners from another lead system, setting appointments with homeowners already found by the bird dog, or driving for dollars in undesirable neighborhoods.

Driving for dollars is simply the process of driving street by street in a specific neighborhood, finding properties that are overgrown or look abandoned and then following up on the leads to find what is hoped to be a motivated seller. In my experience, my deals have been found by driving for dollars more than any other single source of prospecting – in our system it amounts to 40%+ of our deals.

Bird dogs will be required to take pictures and possibly do research to complete a package of information to give to the investor for him to follow-up on and purchase the property. If that is completed, the investor will sell it and make a profit and the bird dog will be compensated.

Compensation can be in the form of a set amount for each lead, or a percentage of the profits on the deal – profits being defined as the investor determines. In most states, a percentage of the profit is considered a compensation for a non-equitable interest in the property. This legally means the bird dog must be a licensed realtor so check on how this will be handled to avoid any regulatory problems. If the bird dog is a partner in the deal, as in a signed contract in effect, this should overcome the commission issue but always check with a local real estate attorney to stay out of trouble.

The investor recruiting a bird dog knows that the better trained the bird dog the less likely he is to stay working for him. Even if the investor gives a 1099 Income Statement with no withholding for an independent contractor, the bird dog is his employee. The investor will train the bird dog minimally to grunt out the hard work and eventually the bird dog will fall by the wayside because of a lack of income or go on his own when he understands he isn’t making enough for his efforts.

As an example, if the investor pays $10 per lead with pictures and all the research done from the public records, and he does this for 100 homes, he will make $1,000. However, if the investor knows his stuff, he will close and make a profit of at least $10,000 on 5% of the properties. This closing ratio could be as high as 20% if the bird dog did his job correctly. So the bird dog makes $1,000 and the investor makes between $50,000 and $200,000 – seems disproportionate, doesn’t it?

The more important question is what happens if the bird dog is injured on the job and needs medical benefits, who pays for his general expenses, how much is he really making and can he track the sales if he is a partner in the deals? I met a full-time bird dog when I was at a property that I had been prospecting for two years for an investor and he was told his prospects never turned into deals. This is absolutely impossible, but he continued working for his expenses and hoping to become an investor one day.

The investor is better off to continue to recruit newbies and let them drop away than making them real apprentices with the risk they become his next competitor. The techniques of prospecting that are taught to bird dogs by investor “masters” are ones that anyone can learn in a day. The major issue for someone getting into the business is selling the properties under contract and that can be as easy as finding the sellers. If you try bird dogging be ready for the unexpected and be careful out there.